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The heavy-equipment maker's sales and earnings rose during the extended commodity boom, but its production cuts and forecast indicate that a recovery this year is uncertain.

The Peoria, Ill., company, whose results beat analysts' expectations, said the economic environment has deteriorated despite government stimulus efforts and a relatively bullish stance on commodity prices. Caterpillar expects the global economy to decline at least 1.3% this year, worse than its earlier expectations.

Caterpillar, whose heavy machinery is shown at a Denver construction site Tuesday, is weighing a dividend cut.
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"This will likely be the worst year for global GDP [gross-domestic-product] growth in over 50 years," said Chairman and Chief Executive Jim Owens during a conference call with analysts. "We modeled for a world-wide recession, but not one quite as severe as we've seen."

Caterpillar reported a first-quarter net loss of $112 million, or 19 cents a share, compared with year-earlier profit of $922 million, or $1.45 a share. Excluding $558 million in costs for layoffs and plant closings, the company would have posted a 39-cent profit. Sales fell 22% to $9.23 billion. The mean estimate of analysts surveyed by Thomson Reuters was for earnings of four cents a share on revenue of $8.54 billion.

How the 30 companies of the DJIA have performed each quarter since the financial crisis began.

The company cut its 2009 profit forecast in half to $1.25 a share on revenue of $35 billion. In January, the company said it expected to earn $2.50 a share on sales of about $40 billion.

Caterpillar expects total restructuring costs this year to reach $700 million. It is shedding about 25,000 jobs as it closes plants, shortens workweeks and cuts other costs.

Mr. Owens said the company's board is discussing whether a stock-dividend reduction is needed to preserve cash but added that no decision has been reached.

The company also said the $70 billion designated for infrastructure construction as part of the U.S. economic-stimulus program isn't enough to offset private-sector declines. It was more optimistic about overseas initiatives, notably in China.